World Bank to stamp out
corruption
Accra, Jan.21, Ghanadot/GNA – The World Bank has
instituted measures to eradicate corrupt practices among
contractors undertaking its sponsored projects, a
release form the Accra Office of the Bank said on
Wednesday.

The release said the Bank had debarred seven firms and
one individual for engaging in collusive practices under
a major World Bank-financed roads project in the
Philippines. Two of the debarments are permanent, the
strongest possible sanction.

The debarments, which prevent the parties from bidding
on future World Bank-financed contracts, either
indefinitely or for the period of the sanctions,
resulted from an in-depth inquiry conducted by the World
Bank’s Integrity Vice-Presidency (INT). INT is
responsible for investigating allegations of fraud and
corruption in Bank-financed operations.

The INT investigation uncovered evidence of a major
cartel involving local and international firms bidding
on contracts under Phase One of the Philippines National
Roads Improvement and Management Programme known as
NRIMP I.

The release said INT closely analyzed the procurement
process the firms participated in and conducted numerous
interviews before closing the investigations and
initiating sanctions proceedings against the entities.

As a result of swift action when suspicions of collusion
in the bidding process were raised by the project team,
the World Bank stopped an estimated $33 million from
being awarded. No World Bank funds from the NRIMP I
project were disbursed to the now-sanctioned firms.

Leonard McCarthy, World Bank Integrity Vice President,
said: “This is one of our most important and
far-reaching cases, and it highlights the effectiveness
of the World Bank’s investigative and sanctions process.
“As the World Bank Group continues to ramp up its
anti-corruption work, INT will remain vigilant in
investigating allegations and holding wrongdoers
accountable.”

Mr McCarthy said INT was in the process of conducting a
worldwide review of the Bank’s activity in the roads
sector.

Based on INT’s investigation of the NRIMP I case, the
World Bank’s Sanctions Board, made up of senior Bank
officials and external legal experts, decided that the
entities had participated in a collusive scheme designed
to establish bid prices at artificial, non-competitive
levels and to deprive the Borrower of the benefits of
free and open competition. This constitutes fraudulent
practices under the applicable procurement rules
applying to NRIMP I.

According to the release the affected firms and lengths
of debarments were: E. C. de Luna Construction Corp. and
Eduardo C. de Luna, owner and sole proprietor of the
firm, were both debarred indefinitely – the first
permanent debarments since 2004.

China Road and Bridge Corporation was debarred for eight
years. The debarment can be reduced or terminated after
five years if the firm puts in place a compliance
programme satisfactory to the World Bank.
China State Construction Corporation and China Wu Yi Co.
Ltd. were each debarred for six years. In the case of
each firm, the debarment can be reduced or terminated
after four years if that firm puts in place a compliance
program satisfactory to the World Bank.

China Geo-Engineering Corporation was debarred for five
years. The debarment can be reduced or terminated after
three years if the firm puts in place a compliance
programme satisfactory to the World Bank.

Cavite Ideal International Construction and Development
Corporation and CM Pancho Construction, Inc. were each
debarred for four years. In the case of each firm, the
debarment can be reduced or terminated after two years
if that firm puts in place a compliance programme
satisfactory to the World Bank.

Another firm, Dongsung Construction Company Limited (Dongsung)
was separately debarred in August 2008 for four years
for fraudulent and corrupt practices in relation to the
NRIMP 1 case, with the debarment subject to reduction or
termination after two years if the firm puts in place a
compliance programme satisfactory to the World Bank.

Dongsung did not contest the accusations brought against
it in the Notice initiating the Bank’s administrative
sanctions proceedings, and the Sanctions Board, as
required by the applicable Sanctions Procedures in any
uncontested proceeding, imposed the sanction recommended
by the Bank’s Evaluation and Suspension Officer (EO) in
the Notice without review of the case.

The sanctioned entities will have their names listed on
the World Bank’s website for the full extent of the
sanctioned period and will be ineligible to bid on World
Bank Group contracts during this period.

James Adams, World Bank Vice President for East Asia;
said: “Misuse of public money is a problem for everyone.
It deprives the poorest people of the development funds
that are so vitally needed and it undermines public
confidence in public and private institutions.

“This case shows our processes working as they should;
we detected the possibility of collusion early, we took
action to investigate, we worked with the Government of
the Philippines to strengthen anti-corruption controls
in the next phase of the project and after an extensive
and fair process, we have sanctioned the parties
involved.”

NRIMP was designed to assist the Philippines Government
to upgrade its roads network and was partially financed
by a $150 million loan from the World Bank. It aimed not
just to build roads, but also to address weaknesses in
project management, so that future roads projects would
deliver more benefit at lower cost.

As a result of NRIMP I, which closed in March 2007,
1,400 kilometres of roads were built or resurfaced and
management of money for roads within the Department of
Public Works and Highways was improved.

The second phase of the programme, which is now
underway, has been designed with even tighter
anti-corruption mechanisms, including independent
procurement evaluation, stronger internal controls and
oversight of road construction by a civil society group
known as “Road Watch”.

The World Bank revised its sanctions procedures in 2006
to allow the Bank to deal with fraud and corruption
cases more efficiently.

In the first tier of the process, the Bank’s EO reviews
the case brought by INT against a respondent, determines
whether or not there is sufficient evidence to support
the accusations and recommends an appropriate sanction.

The EO may also temporarily suspend the firm from
bidding during the sanctions process. If a firm chooses
not to contest the accusations against it within 90
days, the Sanctions Board will then impose the
recommended sanction. If a firm disputes the findings,
the Sanctions Board will review the firm’s response and
INT’s rejoinder and then makes a decision. If a hearing
is requested, the Sanctions Board will allow INT and the
firm to argue the case orally before taking a decision.

As a result of the temporary suspensions issued by the
Bank’s EO against all the entities in July 2008, the
companies were prevented from participating in World
Bank Group-financed activities pending the outcome of
the Sanctions Board proceeding.

Based on INT investigations, the World Bank has since
1999 debarred 351 firms and individuals for their
involvement in fraud and corruption in the
Bank’s-financed projects.

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